-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Qtw8atX46tfMdYKsUJOiOIdc9GEj9EhbhK86NvSUsGFCbT3P3vh+9EHCt1VCPdzF KTo1bpIv5y1tPjX7GrZHXA== 0000948524-97-000013.txt : 19970328 0000948524-97-000013.hdr.sgml : 19970328 ACCESSION NUMBER: 0000948524-97-000013 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970327 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHOENIX LEASING CASH DISTRIBUTION FUND IV CENTRAL INDEX KEY: 0000853571 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER RENTAL & LEASING [7377] IRS NUMBER: 680191380 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-18278 FILM NUMBER: 97564784 BUSINESS ADDRESS: STREET 1: 2401 KERNER BLVD CITY: SAN RAFAEL STATE: CA ZIP: 94901 BUSINESS PHONE: 4154854500 10-K 1 12/31/96 10K Page 1 of 32 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- FORM 10-K __X__ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended December 31, 1996 Commission File Number 0-18278 PHOENIX LEASING CASH DISTRIBUTION FUND IV, A CALIFORNIA LIMITED PARTNERSHIP - -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) California 68-0191380 - ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 2401 Kerner Boulevard, San Rafael, California 94901-5527 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (415) 485-4500 -------------- Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: Units of Limited Partnership Interest Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. _______ Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes __X__ No _____ As of December 31, 1996, 6,242,943 Units of Limited Partnership interest were outstanding. No market exists for the Units of Partnership interest and therefore there exists no aggregate market value at December 31, 1996. DOCUMENTS INCORPORATED BY REFERENCE: NONE Page 2 of 32 PHOENIX LEASING CASH DISTRIBUTION FUND IV, A CALIFORNIA LIMITED PARTNERSHIP 1996 FORM 10-K ANNUAL REPORT TABLE OF CONTENTS Page PART I Item 1. Business...................................................... 3 Item 2. Properties.................................................... 4 Item 3. Legal Proceedings............................................. 5 Item 4. Submission of Matters to a Vote of Security Holders........... 5 PART II Item 5. Market for the Registrant's Securities and Related Security Holder Matters....................................... 5 Item 6. Selected Financial Data....................................... 5 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations..................................... 6 Item 8. Financial Statements and Supplementary Data................... 9 Item 9. Disagreements on Accounting and Financial Disclosure Matters.. 28 PART III Item 10. Directors and Executive Officers of the Registrant............ 28 Item 11. Executive Compensation........................................ 29 Item 12. Security Ownership of Certain Beneficial Owners and Management 29 Item 13. Certain Relationships and Related Transactions................ 29 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K...................................................... 30 Signatures............................................................... 31 Page 3 of 32 PART I Item 1. Business. General Development of Business. Phoenix Leasing Cash Distribution Fund IV, a California limited partnership (the Partnership), was organized on August 22, 1989. The Partnership was registered with the Securities and Exchange Commission with an effective date of December 27, 1989 and shall continue to operate until its termination date unless dissolved sooner due to the sale of substantially all of the assets of the Partnership or a vote of the Limited Partners. The Partnership will terminate on December 31, 2000. The General Partner is Phoenix Leasing Incorporated, a California corporation. The General Partner or its affiliates also is or has been a general partner in several other limited partnerships formed to invest in capital equipment and other assets. The initial public offering was for 3,750,000 units of limited partnership interest at a price of $20 per unit. During 1991, the Partnership increased the public offering up to a maximum of 6,500,000 units. The Partnership completed its public offering on December 27, 1991. As of December 27, 1991, the Partnership sold 6,492,727 units for a total capitalization of $129,847,540. Of the proceeds received through the offering, the Partnership has incurred $16,292,000 in organizational and offering expenses. Narrative Description of Business. Equipment Leasing and Financing Operations From the initial formation of the Partnership through December 31, 1996, the total investments in equipment leases and financing transactions (loans), including the Partnership's pro rata interest in investments made by joint ventures, approximate $266,852,000. The average initial firm term of contractual payments from equipment subject to lease was 43.09 months, and the average initial net monthly payment rate as a percentage of the original purchase price was 2.71%. The average initial firm term of contractual payments from loans was 62.09 months. The Partnership's principal objective is to produce cash flow to the investors on a continuing basis over the life of the Partnership. To achieve this objective, the Partnership will invest in various types of capital equipment and other assets to provide leasing or financing of the same to third parties, including Fortune 1000 companies and their subsidiaries, middle-market companies, emerging growth companies, franchised businesses, pay television system operators and others, on either a long-term or short-term basis. The types of equipment that the Partnership will invest in will include, but is not limited to, computer peripherals, terminal systems, small computer systems, communications equipment, IBM mainframes, IBM-software compatible mainframes, office systems, CAE/CAD/CAM equipment, telecommunications equipment, cable television equipment, medical equipment, production and manufacturing equipment and software products. In addition to acquiring equipment for lease to third parties, the Partnership, either directly or through the investment in joint ventures, has provided limited financing to certain emerging growth companies, cable television operators, manufacturers and their lessees with respect to assets leased directly by such manufacturers to third parties. The Partnership maintains a security interest in the assets financed and in the receivables due under any lease or rental agreement relating to such assets. Such security interests constitute a lien on the equipment and will give the Partnership the right, upon default, to obtain possession of the assets. During the Partnership offering, the Partnership acquired significant amounts of equipment or assets and provided financing with the net offering proceeds. In addition, the Partnership has acquired equipment through the use of debt financing. The ratio of the outstanding debt to net capital contributions less any investment in Leveraged Joint Ventures at the end of the Partnership's offering period will not exceed one-to-one. The cash flow generated by such investments in equipment leases or financing transactions has been and will be used to provide for debt service, to provide cash distributions to the Partners and the remainder will be reinvested in capital equipment or other assets. The Partnership has acquired and intends to acquire and lease equipment pursuant to either "Operating" leases or "Financing" leases. At December 31, 1996, approximately 93% of the equipment owned by the Partnership was classified as Financing leases. The Partnership has also provided and intends to provide financing secured by assets in the form of notes receivable. Operating leases are generally short-term leases under which the lessor will receive aggregate rental payments in an amount that is less than the purchase price of the Page 4 of 32 equipment. Financing leases are generally for a longer term under which the noncancellable rental payments due during the initial term of the lease are at least sufficient to recover the purchase price of the equipment. Competition. The General Partner has concentrated the Partnership's activities in the equipment leasing and financing industry, an area where the General Partner has developed an expertise. The equipment leasing industry is extremely competitive. The Partnership competes with many well established companies having substantially greater financial resources. Competitive factors include pricing, technological innovation and methods of financing (including use of various short-term and long-term financing plans, as well as the outright purchase of equipment). Generally, the impact of these factors to the Partnership would be the realization of increased equipment remarketing and storage costs, as well as lower residuals received from the sale or remarketing of such equipment. Cable Television System Operations. Phoenix Westcom Cablevision, Inc. (the Subsidiary), a wholly-owned subsidiary of the Partnership, owned a cable television system in the state of Arizona that was acquired through foreclosure on a defaulted note receivable to the Partnership on December 23, 1994. The net carrying value of the Partnership's share of this defaulted note receivable was approximately $885,000. Phoenix Cable Management Inc. (PCMI), an affiliate of the General Partner, provides day to day management services in connection with the operation of the system. On October 23, 1996, Phoenix Westcom Cablevision, Inc. sold all the assets used in the operations of its cable television system receiving proceeds of approximately $735,000, resulting in a loss on sale of the assets of the cable system of $64,000. As a result of the sale of the cable television system's assets, the Subsidiary ceased operations. Other. A brief description of the type of assets in which the Partnership has invested as of December 31, 1996, together with information concerning the uses of assets is set forth in Item 2. Item 2. Properties. Equipment Leasing and Financing Operations. The Partnership is engaged in the equipment leasing and financing industry and as such, does not own or operate any principal plants, mines or real property. The primary assets held by the Partnership are its investments in leases and loans. As of December 31, 1996, the Partnership owns equipment and has outstanding loans to borrowers with an aggregate original cost of $95,937,000. The equipment and loans have been made to customers located throughout the United States. The following table summarizes the type of equipment owned or financed by the Partnership, including its pro rata interest in joint ventures, at December 31, 1996. Percentage of Asset Types Purchase Price(1) Total Assets ----------- ----------------- ------------- (Amounts in Thousands) Capital Equipment Leased to Emerging Growth Companies $ 23,644 25% Computer Peripherals 19,255 20 Furniture and Fixtures 18,491 19 Small Computer Systems 8,611 9 Financing Related to Emerging Growth Companies 7,268 8 Computer Mainframes 5,644 6 Miscellaneous 5,107 5 Financing of Other Businesses 4,357 4 Telecommunications 2,769 3 Financing Related to Pay TV Systems and Other Media 791 1 -------- --- TOTAL $ 95,937 100% ======== === Page 5 of 32 (1) These amounts include the Partnership's pro rata interest in equipment joint ventures of $6,785,000, a financing joint venture of $290,000, cost of equipment on financing leases of $39,970,000 and original cost of outstanding loans of $12,126,000 at December 31, 1996. Item 3. Legal Proceedings. The Registrant is not a party to any pending legal proceedings which would have a material adverse impact on its financial position. Item 4. Submission of Matters to a Vote of Security Holders. No matters were submitted to a vote of limited partners, through the solicitation of proxies or otherwise, during the year covered by this report. PART II Item 5. Market for the Registrant's Securities and Related Security Holder Matters. (a)The Registrant's limited partnership interests are not publicly traded. There is no market for the Registrant's limited partnership interests and it is unlikely that any will develop. (b)Approximate Number of Equity Security Investments: Number of Unit Holders Title of Class as of December 31, 1996 ---------------------------------- ----------------------- Limited Partners 8,343 Item 6. Selected Financial Data. 1996(1) 1995(1) 1994(1) 1993 1992 -------- -------- -------- -------- -------- (Amounts in Thousands Except for Per Unit Amounts) Total Income $ 12,926 $ 15,469 $ 20,589 $ 35,234 $ 41,748 Net Income (loss) 5,856 4,228 (1,217) 980 4,440 Total Assets 39,575 50,262 66,299 99,380 138,814 Long-term Debt Obligations -- -- 114 3,656 17,668 Distributions to Partners 15,880 16,062 16,174 16,289 16,189 Net Income (loss) per Limited Partnership Unit .81 .41 (.19) .03 .56 Distributions per Limited Partnership Unit 2.40 2.40 2.40 2.41 2.38 (1) These amounts reflect the consolidated activity of the Partnership and its subsidiary. The above selected financial data should be read in conjunction with the financial statements and related notes appearing elsewhere in this report. Page 6 of 32 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations Phoenix Leasing Cash Distribution Fund IV and Subsidiary (the Partnership) reported net income of $5,856,000 for the year ended December 31, 1996, as compared to $4,228,000 during 1995 and a net loss of $1,217,000 during 1994. The increase in earnings during 1996 and 1995, as compared to the respective previous year, is due to a decrease in total expenses, primarily depreciation, that exceeded the decrease in total revenues. The decrease in total revenues of $2,543,000 for the year ended December 31, 1996, as compared to 1995, is primarily the result of a decrease in rental income of $2,021,000, and to a lesser extent, a decrease in earned income from financing leases of $965,000. The decrease in total revenues of $5,120,000 during the year ended December 31, 1995, as compared to the same period in 1994, was primarily attributable to a decrease in rental income of $3,783,000, as well as, decreases in earned income from financing leases of $1,233,000 and interest income from notes receivable of $838,000. The decrease in rental income during 1996 and 1995, as compared to the same period in the previous year, is a reflective of a decrease in the size of the equipment portfolio. The Partnership owned equipment with an aggregate original cost of $76.7 million at December 31, 1996 ,as compared to $96 million at December 31, 1995. Partially offsetting this factor, in 1996, is a settlement payment which is included in rental income of $638,000 from a lessee that had defaulted in 1992. An additional factor contributing to the decline in rental income in 1995, was the increase in the amount of equipment being held for lease. During 1994, many of the initial lease terms of the Partnership's equipment began to expire. As a result, the Partnership must either renew the leases with the current lessee, remarket the equipment to new lessees or sell the equipment. Until new lessees or buyers of equipment can be found, the equipment continued to generate depreciation expense without any corresponding rental income. The effect of this was a reduction of the Partnership earnings during this remarketing period. The decrease in earned income from financing leases during 1996 and 1995, as compared to the same period in the previous year, is due to a decrease in the Partnership's net investment in financing lease to $17 million at December 31, 1996 from $24.7 million at December 31, 1995. The investment in financing leases, as well as earned income from financing leases, will decrease over the lease term as the Partnership amortizes income over the lease term using the interest method of accounting. This effect will be mitigated to some degree as the Partnership continues to invest in new financing leases over its life. During both 1996 and 1995, the Partnership invested $6.4 million in new financing leases. The Partnership reported a gain on the sale of securities of $977,000 on proceeds from the sale of securities of $1,005,000 during the year ended December 31, 1996, as compared to a gain of $235,000 on proceeds of $235,000 during 1995, and a gain of $118,000 on proceeds of $118,000 during 1994. These securities consisted of common stock and stock warrants granted to the Partnership as part of a financing agreement with several emerging growth companies. The Partnership owns shares of common stock and stock warrants in emerging growth companies that are publicly traded with unrealized gains of $525,000 at December 31, 1996. These investments in stock and stock warrants carry certain restrictions, but generally can be exercised within a one year period. An additional factor contributing to the decline in total revenues for the year ended December 31, 1995, compared to 1994, was the reduction in interest income from notes receivable of $838,000. This decline was due to a decrease in the net carrying value of outstanding notes as well as an increase in impaired notes receivable. During 1995, the Partnership received payoffs of $1,251,000 from three notes receivable and foreclosed upon another note receivable. As a result, the Partnership applied $133,000 of its allowance for losses on notes receivable during 1995. This activity was the primary reason for the decrease in interest income and the decreased net carrying value of notes receivable to $5.4 million at December 31, 1995 from $8.9 million at December 31, 1994. At December 31, 1995, the Partnership held notes receivable that are classified as impaired with a net carrying value of $2,747,000. The Partnership does not accrue interest income on notes receivable that have been determined to be impaired. In contrast, interest income from notes receivable had a small increase of $45,000 for the year ended December 31, 1996, as compared to 1995. This increase in interest income from notes receivable is primarily the result of a settlement received from a note receivable which was considered to be impaired from a cable television system operator and new investments in notes receivable. The Partnership received $856,000 as a settlement which was applied to the Page 7 of 32 $605,000 outstanding note receivable balance and the remainder of $251,000 was recognized as interest income from notes receivable. During the year ended December 31, 1996, the Partnership made new investments in notes receivable of $2,440,000 compared to $1,856,000 during 1995. Partially offsetting the factors contributing to the increase in interest income from notes receivable for the year ended December 31, 1996, as compared to the previous year, is the decline in the net carrying value of the notes receivable. The net carrying value of the outstanding notes receivable at December 31, 1996 is $4.6 million compared to $5.4 million at December 31, 1995. Total expenses decreased by $4,252,000 and $10,524,000 during 1996 and 1995, respectively, as compared to the same period in the previous year. A majority of the decrease in total expenses is due to the decrease in depreciation expense of $2,360,000 and $7,488,000 during 1996 and 1995, respectively, as compared to the same period in the previous year. This decrease is due to a decline in the amount of depreciable equipment owned by the Partnership. In addition, the Partnership experienced declines in most other expense categories during 1996 and 1995, when compared to the same period in the previous year. Inflation affects the Partnership in relation to the current cost of equipment placed on lease and the residual values realized when the equipment comes off-lease and is sold. During the last several years inflation has been low, thereby having very little impact upon the investments of the Partnership. Cable Television System: Included in other income for 1996 and 1995 is cable subscriber revenues from a wholly-owned subsidiary (Phoenix Westcom Cablevision, Inc) of the Partnership. The cable television system was acquired through foreclosure on a defaulted note receivable to the Partnership on December 23, 1994. As a result, there were no results of operations from this cable television system during 1994. On October 10, 1996, Phoenix Westcom Cablevision Inc. sold all of its tangible and intangible assets used in the operation of its cable television system for proceeds of $735,000 resulting in a loss on the sale of these assets of $64,000. This loss on sale is included in other income during 1996. As a result of the sale of the cable television system's assets, the subsidiary ceased operations. The revenues from this cable television system have not had a significant impact upon total revenues during 1996 and 1995. Liquidity and Capital Resources The Partnership's primary source of liquidity is derived from its contractual obligations with a diversified group of lessees for fixed lease terms at fixed rental amounts, and from payments of principal and interest on its outstanding notes receivable. As the initial lease terms expire, the Partnership will re-lease or sell the equipment. The future liquidity of the Partnership will depend upon the General Partner's success in collecting the contractual amounts owed, as well as re-leasing and selling the Partnership's equipment as it comes off lease. The Partnership reported net cash generated by equipment leasing, financing and cable television activities of $23,034,000 during 1996, as compared to $26,689,000 and $38,461,000 during 1995 and 1994, respectively. The decrease in the net cash generated during 1996 and 1995 is due to a decrease in rental income and payments on notes receivable and financing leases. The Partnership received proceeds from the sale of equipment of $925,000 during the year ended December 31, 1996 compared to $3,428,000 and $4,869,000 received in 1995 and 1994, respectively. The decrease in sales proceeds in 1996 and 1995 is attributable to a decrease in the amount of equipment sold as well as a decrease in the market value of the equipment sold. During 1996, the Partnership sold equipment with an aggregate original cost of $25.8 million compared to $38.8 million during 1995 and $48.3 million during 1994. The Partnership's outstanding debt was paid off in full during 1995. As a result , the Partnership did not make any payments of principal during 1996, as compared to payments of principal on its outstanding debt of $3,195,000 in 1995 and $14,311,000 in 1994. The Partnership received cash distributions from joint ventures of $727,000 during 1996, as compared to cash distributions of $1,195,000 during 1995 and $9,713,000 during 1994. Distributions from joint ventures were higher during 1995, as compared to 1996, due to the Partnership receiving a distribution of excess cash on hand from a joint venture that was formed on August 1, 1994. During 1994, this newly formed joint venture made a significant Page 8 of 32 distribution as a result of it receiving proceeds from the issuance of lease backed certificates. As a result, this joint venture made a distribution of the proceeds to the Partnership. This joint venture was not expected to generate any significant amounts of cash available for distribution until the outstanding debt of this joint venture was paid in full. In November of 1996, the outstanding debt had been repaid in full. This joint venture is expected to begin making distributions to the Partnership in 1997. The Partnership anticipates reinvesting a portion of the cash generated from operations in new leasing or financing transactions over the life of the Partnership. During 1994, 1995 and 1996, the Partnership purchased equipment leases with an aggregate original cost of $6.4 million, $6.4 million and $14.8 million, respectively. The equipment owned by the Partnership at December 31, 1996 approximates $76.7 million, as compared to $96 million at December 31, 1995 and $128.4 million at December 31, 1994. As of December 31, 1996, the Partnership owned equipment being held for lease with an original purchase price of $17,496,000 and a net book value of $1,015,000 , compared to $8,349,000 and $997,000, respectively, at December 31, 1995 and $21,667,000 and $1,855,000, respectively, at December 31, 1994. The General Partner is actively engaged, on behalf of the Partnership, in remarketing and selling the Partnership's equipment as it becomes available. The total cash distributed to partners during 1996 was $15,880,000, as compared to $16,062,000 during 1995 and $16,174,000 during 1994. In accordance with the partnership agreement, the limited partners are entitled to 95% of the cash available for distribution and the General Partner is entitled to 5%. As a result, the limited partners received $15,085,000, $15,258,000 and $15,364,000 during 1996, 1995 and 1994, respectively. The cumulative cash distributions to limited partners was $88,222,000 at December 31, 1996, as compared to $73,137,000 at December 31, 1995 and $57,879,000 at December 31, 1994. The General Partner received $795,000, $804,000 and $810,000 for its share of the cash available for distribution during 1996, 1995 and 1994, respectively. The Partnership currently anticipates making distributions to partners during 1997 at approximately the same rate as 1996. The cash to be generated from leasing and financing operations is anticipated to be sufficient to meet the Partnership's continuing operational expenses and to provide for distributions to partners. Forward-looking statements in this report are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results could differ from those anticipated by some of the statements made above. Limited Partners are cautioned that such forward-looking statements involve risks and uncertainties including without limitation the following: (i) the Partnership's plans are subject to change at any time at the discretion of the General Partner of the Partnership, (ii) future technological developments in the industry in which the Partnership operates, (iii) competitive pressure on pricing or services, (iv) substantial customer defaults or cancellations, (v) changes in business conditions and the general economy, (vi) changes in government regulations affecting the Partnership's core businesses and (vii) the ability of the Partnership to sell its remaining assets . Page 9 of 32 Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA PHOENIX LEASING CASH DISTRIBUTION FUND IV, A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY YEAR ENDED DECEMBER 31, 1996 Page 10 of 32 REPORT OF INDEPENDENT AUDITORS ------------------------------ The Partners Phoenix Leasing Cash Distribution Fund IV, a California limited partnership We have audited the consolidated financial statements of Phoenix Leasing Cash Distribution Fund IV, a California limited partnership, and Subsidiary, listed in the accompanying index to financial statements (Item 14(a)). Our audits also included the financial statement schedule listed in the Index at Item 14(a). These financial statements and the schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements and the schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and schedule are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements listed in the accompanying index to financial statements (Item 14(a)) present fairly, in all material respects, the consolidated financial position of Phoenix Leasing Cash Distribution Fund IV, a California limited partnership, and Subsidiary, at December 31, 1996 and 1995, and the consolidated results of their operations and their cash flows for the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. ERNST & YOUNG LLP San Francisco, California January 20, 1997 Page 11 of 32 PHOENIX LEASING CASH DISTRIBUTION FUND IV, A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (Amounts in Thousands Except for Unit Amounts) December 31, 1996 1995 -------- -------- ASSETS Cash and cash equivalents $ 12,134 $ 11,571 Accounts receivable (net of allowance for losses on accounts receivable of $424 and $548 at December 31, 1996 and 1995, respectively) 484 603 Notes receivable (net of allowance for losses on notes receivable of $2,224 and $2,241 at December 31, 1996 and 1995 respectively) 4,654 5,428 Equipment on operating leases and held for lease (net of accumulated depreciation of $26,179 and $32,579 at December 31, 1996 and 1995, respectively) 1,376 2,576 Net investment in financing leases (net of allowance for early terminations of $941 and $755 at December 31, 1996 and 1995, respectively) 16,973 24,685 Investment in joint ventures 2,278 2,451 Capitalized acquisition fees (net of accumulated amortization of $9,695 and $8,961 at December 31, 1996 and 1995, respectively) 957 1,336 Other assets 719 1,612 -------- -------- Total Assets $ 39,575 $ 50,262 ======== ======== LIABILITIES AND PARTNERS' CAPITAL Liabilities: Accounts payable and accrued expenses $ 1,511 $ 1,817 -------- -------- Total Liabilities 1,511 1,817 -------- -------- Partners' Capital: General Partner -- -- Limited Partners, 6,500,000 units authorized, 6,492,727 units issued, 6,242,943 and 6,318,955 units outstanding at December 31, 1996 and 1995, respectively 37,539 48,068 Unrealized gain on available-for-sale securities 525 377 -------- -------- Total Partners' Capital 38,064 48,445 -------- -------- Total Liabilities and Partners' Capital $ 39,575 $ 50,262 ======== ======== The accompanying notes are an integral part of these statements. Page 12 of 32 PHOENIX LEASING CASH DISTRIBUTION FUND IV, A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in Thousands Except for Per Unit Amounts) For the Years Ended December 31, 1996 1995 1994 -------- -------- -------- INCOME Rental income $ 6,209 $ 8,230 $ 12,013 Earned income, financing leases 3,372 4,337 5,570 Interest income, notes receivable 1,202 1,157 1,995 Gain on sale of securities 977 235 118 Equity in earnings from joint ventures, net 412 596 429 Other income 754 914 464 -------- -------- -------- Total Income 12,926 15,469 20,589 -------- -------- -------- EXPENSES Depreciation 3,290 5,650 13,138 Amortization of acquisition fees 733 1,089 2,192 Lease related operating expenses 296 481 760 Management fees to General Partner 971 1,202 1,658 Interest expense -- 81 489 Reimbursed administrative costs to General Partner 734 914 858 Provision for losses on receivables 338 904 1,889 Legal expenses 203 326 466 General and administrative expenses 465 635 356 -------- -------- -------- Total Expenses 7,030 11,282 21,806 -------- -------- -------- NET INCOME (LOSS) BEFORE INCOME TAXES 5,896 4,187 (1,217) Income tax benefit (expense) of subsidiary (40) 41 -- -------- -------- -------- NET INCOME (LOSS) $ 5,856 $ 4,228 $ (1,217) ======== ======== ======== NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT $ .81 $ .41 $ (.19) ======== ======== ======== ALLOCATION OF NET INCOME (LOSS): General Partner $ 795 $ 1,626 $ (12) Limited Partners 5,061 2,602 (1,205) -------- -------- -------- $ 5,856 $ 4,228 $ (1,217) ======== ======== ======== The accompanying notes are an integral part of these statements. Page 13 of 32 PHOENIX LEASING CASH DISTRIBUTION FUND IV, A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL (Amounts in Thousands Except for Unit Amounts)
General Partner's Limited Partners' Unrealized Total Amount Units Amount Gains Amount --------- ------------------- ---------- ------ Balance, December 31, 1993 $ - 6,407,825 $78,119 $ - $ 78,119 Distributions to partners ($2.40 per limited partnership unit) (810) - (15,364) - (16,174) Redemptions of capital - (38,405) (403) - (403) Net loss (12) - (1,205) - (1,217) ------ --------- ------- ----- -------- Balance, December 31, 1994 (822) 6,369,420 61,147 - 60,325 Distributions to partners ($2.40 per limited partnership unit) (804) - (15,258) - (16,062) Redemptions of capital - (50,465) (423) - (423) Net income 1,626 - 2,602 - 4,228 Change for the year in unrealized gain on available-for-sale securities - - - 377 377 ------ --------- ------- ----- -------- Balance, December 31, 1995 - 6,318,955 48,068 377 48,445 Distributions to partners ($2.40 per limited partnership unit) (795) - (15,085) - (15,880) Redemptions of capital - (76,012) (505) - (505) Net income 795 - 5,061 - 5,856 Change for the year in unrealized gain on available-for-sale securities - - - 148 148 ------ --------- ------- ----- -------- Balance, December 31, 1996 $ - 6,242,943 $37,539 $ 525 $ 38,064 ====== ========= ======= ===== ======== The accompanying notes are an integral part of these statements.
Page 14 of 32 PHOENIX LEASING CASH DISTRIBUTION FUND IV, A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in Thousands) For the Years Ended December 31, 1996 1995 1994 -------- -------- -------- Operating Activities: Net income (loss) $ 5,856 $ 4,228 $ (1,217) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 3,290 5,650 13,138 Amortization of acquisition fees 733 1,089 2,192 Gain on sale of equipment (381) (845) (695) Gain on sale of securities (977) (235) (118) Loss on sale of assets of the cable television system 64 -- -- Equity in earnings from joint ventures, net (412) (596) (429) Provision for early termination, financing leases 352 408 718 Provision for (recovery of) losses on notes receivable (17) 110 908 Provision for losses on accounts receivable 3 386 263 Decrease (increase) in accounts receivable 88 (99) 816 Decrease in accounts payable and accrued expenses (118) (1,000) (904) Decrease in other assets 92 163 98 Decrease (increase) in deferred income tax asset 40 (40) -- -------- -------- -------- Net cash provided by operating activities 8,613 9,219 14,770 -------- -------- -------- Investing Activities: Principal payments, financing leases 11,263 12,522 14,897 Principal payments, notes receivable 3,158 4,948 8,794 Proceeds from sale of equipment 925 3,428 4,869 Proceeds from sale of securities 1,005 235 118 Proceeds from sale of assets of the cable television system 735 -- -- Distributions from joint ventures 727 1,195 9,713 Purchase of equipment -- (5) (392) Investment in financing leases (6,446) (6,424) (14,750) Cable systems, property and equipment (36) (95) -- Investment in notes receivable (2,440) (1,856) (2,738) Investment in joint ventures (69) -- (290) Investment in securities (28) -- -- Payment of acquisition fees (459) (319) (788) -------- -------- -------- Net cash provided by investing activities 8,335 13,629 19,433 -------- -------- -------- Financing Activities: Payments of principal, notes payable -- (3,195) (14,311) Redemptions of capital (505) (423) (403) Distributions to partners (15,880) (16,062) (16,174) -------- -------- -------- Net cash used by financing activities (16,385) (19,680) (30,888) -------- -------- -------- Increase in cash and cash equivalents 563 3,168 3,315 Cash and cash equivalents, beginning of period 11,571 8,403 5,088 -------- -------- -------- Cash and cash equivalents, end of period $ 12,134 $ 11,571 $ 8,403 ======== ======== ======== Supplemental Cash Flow Information: Cash paid for interest expense $ -- $ 81 $ 504 The accompanying notes are an integral part of these statements. Page 15 of 32 PHOENIX LEASING CASH DISTRIBUTION FUND IV, A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1996 Note 1. Organization and Partnership Matters. Phoenix Leasing Cash Distribution Fund IV, a California limited partnership (the Partnership), was formed on July 14, 1989, to invest in capital equipment of various types and to lease such equipment to third parties on either a long-term or short-term basis and provide financing to emerging growth companies and cable television system operators. The Partnership met its minimum investment requirements on January 12, 1990. The Partnership's termination date is December 31, 2000. The Partnership has also made investments in joint ventures with affiliated partnerships managed by the General Partner for the purpose of reducing the risks of financing or acquiring certain capital equipment leased to third parties (see Note 6). On December 23, 1994, the Partnership foreclosed upon a cable television system in Arizona that was in default on a loan payable to the Partnership with a carrying amount of approximately $885,000 which was carried over to the basis in the cable system. Phoenix Westcom Cablevision, Inc. (the Subsidiary), a wholly owned subsidiary of the Partnership, was formed under the laws of Nevada on August 5, 1994 to own and operate the foreclosed cable television system. Phoenix Westcom Cablevision, Inc. is a wholly-owned subsidiary of the Partnership (hereinafter, the Partnership and the Subsidiary are collectively referred to as the Consolidated Partnership). The acquisition of Westcom Cablevision by the Subsidiary through foreclosure was accounted for using the "purchase method" of accounting in which the net carrying value of the loan was allocated to the net assets in accordance with the relative fair market value of the assets acquired and liabilities assumed. On October 23, 1996, Phoenix Westcom Cablevision, Inc. sold the assets used in the operation of the cable television system receiving net proceeds of approximately $735,000, recognizing a loss on sale of the assets of this cable television system of $64,000. As a result of the sale of the cable television system's assets, the Subsidiary ceased operations. For financial reporting purposes, Partnership income shall be allocated as follows: (a) first, to the General Partner until the cumulative income so allocated is equal to the cumulative distributions to the General Partner, (b) second, one percent to the General Partner and 99% to the Limited Partners until the cumulative income so allocated is equal to any cumulative Partnership loss and syndication expenses for the current and all prior accounting periods, and (c) the balance, if any, to the Unit Holders. All Partnership losses shall be allocated one percent to the General Partner and 99% to the Unit Holders. The General Partner is entitled to receive five percent of all cash distributions until the Limited Partners have recovered their initial capital contributions plus a cumulative return of twelve percent per annum. Thereafter, the General Partner will receive 15% of all cash distributions. From inception of the Partnership until December 31, 1996, the General Partner's interest in Cash Available for Distribution is subordinated in any calendar quarter until the Limited Partners receive quarterly distributions equal to three percent of their Capital Contributions (i.e., 12% per annum), prorated for any partial period. In the event the General Partner has a deficit balance in its capital account at the time of Partnership liquidation, it will be required to contribute the amount of such deficit to the Partnership. As compensation for management services subject to certain limitations, the General Partner receives a fee, payable quarterly, in an amount equal to 3.5% of the Partnership's gross revenues for the quarter from which such payment is being made, which revenues shall include, but are not limited to, rental receipts, maintenance fees, proceeds from the sale of equipment and interest income. The General Partner will be compensated for services performed in connection with the analysis of assets available to the Partnership, the selection of such assets and the acquisition thereof, including obtaining lessees for the equipment, negotiating and concluding master lease agreements with certain lessees. As compensation for such acquisition services, the General Page 16 of 32 Partner will receive a fee equal to four percent, subject to certain limitations, of (a) the purchase price of equipment acquired by the Partnership or equipment leased by manufacturers, the financing for which is provided by the Partnership, or (b) financing provided to businesses such as cable operators, emerging growth companies, or other businesses, payable upon such acquisition or financing, as the case may be. Acquisition fees are amortized over the life of the assets principally on a straight-line basis. Phoenix Cable Management Inc. (PCMI), an affiliate of the General Partner, provided day to day management services in connection with the operation of the Subsidiary. The Subsidiary paid a management fee equal to four and one-half percent of the System's monthly gross revenue for these services. Revenues subject to a management fee at the Subsidiary level were not subject to management fees at the Partnership level. A schedule of compensation paid and distributions made to the General Partner and affiliate for the years ended December 31, follows: 1996 1995 1994 ------- ------- ------- (Amounts in Thousands) Management fees $ 971 $ 1,202 $ 1,658 Acquisition fees 355 329 715 Cash distributions 795 804 810 ------- ------- ------- $ 2,121 $ 2,335 $ 3,183 ======= ======= ======= Note 2. Summary of Significant Accounting Policies. Principles of Consolidation. The 1996, 1995 and 1994 consolidated financial statements include the accounts of the Partnership and its wholly-owned subsidiary, Phoenix Westcom Cablevision, Inc., since the date of acquisition, December 23, 1994. All significant intercompany accounts and transactions have been eliminated in consolidation. Leasing Operations. The Partnership's leasing operations consist of both financing and operating leases. The financing method of accounting for leases records as unearned income at the inception of the lease, the excess of net rentals receivable and estimated residual value at the end of the lease term, over the cost of equipment leased. Unearned income is credited to income monthly over the term of the lease on a declining basis to provide an approximate level rate of return on the unrecovered cost of the investment. Initial direct costs of consummating new leases are capitalized and included in the cost of equipment. The Partnership reviews its estimates of residual value at least annually. If a decline in value has occurred which is other than temporary, a reduction in the investment is recognized currently. Under the operating method of accounting for leases, the leased equipment is recorded as an asset at cost and depreciated. The Partnership's leased equipment is depreciated primarily using an accelerated depreciation method over the estimated useful life of six years. The Partnership's policy is to review periodically the expected economic life of its rental equipment in order to determine the probability of recovering its undepreciated cost. Such reviews address, among other things, recent and anticipated technological developments affecting computer equipment and competitive factors within the computer marketplace. Although remarketing rental rates are expected to decline in the future with respect to some of the Partnership's rental equipment, such rentals are expected to exceed projected expenses including depreciation. Where reviews of the equipment portfolio indicate that rentals plus anticipated sales proceeds will not exceed expenses in any future period, the Partnership revises its depreciation policy and may provide additional depreciation as appropriate. As a result of such periodic reviews, the Partnership provided additional depreciation expense of $544,000, $679,000, and $1,579,000 ($.09, $.11 and $.25 per limited partnership unit) for the years ended December 31, 1996, 1995 and 1994, respectively. Rental income for the year is determined on the basis of rental payments due for the period under the terms of the lease. Maintenance, repairs and minor renewals of the leased equipment are charged to expense. Cable Television System Operations. The consolidated statement of operations includes the operating activity of the Subsidiary for the years ended December 31, 1996 and 1995 and for the period from the date of acquisition (December 23, 1994) to December 31, 1994. The Subsidiary's cable operations consisted of a cable system located in the counties of Maricopa and Mohave in the State of Arizona and consisted of headend equipment and 69 miles of plant passing, approximately 2,060 homes and approximately 737 cable subscribers. The Page 17 of 32 Subsidiary's cable television system served the communities of Cave Creek, Perryville and Peach Springs. The Subsidiary operated under four non-exclusive franchise agreements with the Town of Cave Creek, Maricopa County, Yavapai County and the Hualapai Tribe in Mohave County. As of December 31, 1995, the Consolidated Partnership held $909,000 in property, cable system and equipment which has been included in Other Assets on the balance sheet. Property, cable system and equipment were depreciated using the straight-line method over the estimated service lives ranging from five to 10 years. Replacements, renewals and improvements were capitalized and maintenance and repairs were charged to expense as incurred. Cable television services were billed monthly in advance. Revenue was deferred and recognized as the services were provided. Investments in Joint Ventures. Minority investments in net assets of the equipment, financing and foreclosed cable systems joint ventures reflect the Consolidated Partnership's equity basis in the ventures. Under the equity method of accounting, the original investment is recorded at cost and is adjusted periodically to recognize the Consolidated Partnership's share of earnings, losses, cash contributions and cash distributions after the date of acquisition. Investment in Available-for-Sale Securities. The Partnership has investments in stock warrants in public companies. The Partnership has classified its investments in stock warrants as available-for-sale in accordance with FASB Statement No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Available-for-sale securities are stated at their fair market value, with unrealized gains and losses reported as a separate component of partners' capital. The stock warrants held by the Partnership were granted by certain lessees or borrowers as additional compensation for leasing or financing equipment. At the date of grant, such warrants were determined to have no fair market value and were recorded at their historical cost of $0. Notes Receivable. Notes receivable generally are stated at their outstanding unpaid principal balances, which includes accrued interest. Interest income is accrued on the unpaid principal balance. Impaired Notes Receivable. Generally, notes receivable are classified as impaired and the accrual of interest on such notes is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectibility of the contractual payments, even though the loan may currently be performing. When a note receivable is classified as impaired, income recognition is discontinued. Any payments received subsequent to the placement of the note receivable on to impaired status will generally be applied towards the reduction of the outstanding note receivable balance, which may include previously accrued interest as well as principal. Once the principal and accrued interest balance has been reduced to zero, the remaining payments will be applied to interest income. Generally, notes receivable are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectibility of the total contractual principal and interest is no longer in doubt. Allowance for Losses. An allowance for losses is established through provisions for losses charged against income. Notes receivable deemed to be uncollectible are charged against the allowance for losses, and subsequent recoveries, if any, are credited to the allowance. Reclassification. Certain 1995 and 1994 amounts have been reclassified to conform to the 1996 presentation. Cash and Cash Equivalents. Cash and cash equivalents include deposits at banks, investments in money market funds and other highly liquid short-term investments with original maturities of less than 90 days. The Partnership places its cash deposits in temporary cash investments with credit worthy, high quality financial institutions. The concentration of such cash deposits and temporary cash investments is not deemed to create a significant risk to the Partnership. Non-Cash Investing Activities. During 1996, the Partnership, along with other affiliated partnerships managed by the General Partner, obtained title to a cable television company that had been pledged as collateral for a non-performing note. As a result, the Partnership reclassified $73,000 to Investment in Joint Ventures on the balance sheet. During the year ended December 31, 1996 and 1995, the Partnership recorded an unrealized gain on available-for-sale securities which has been included in Other Assets of $148,000 and $377,000, respectively. During 1995, the Partnership foreclosed on a note receivable which was reclassified from Notes Receivable to Investment in Joint Ventures on the balance sheet. The amount of such reclassification was $230,000. Page 18 of 32 Credit and Collateral. The Partnership's activities have been concentrated in the equipment leasing and financing industry. A credit evaluation is performed by the General Partner for all leases and loans made, with the collateral requirements determined on a case-by-case basis. The Partnership's loans are generally secured by the equipment or assets financed and, in some cases, other collateral of the borrower. In the event of default, the Partnership has the right to foreclose upon the collateral used to secure such loans. Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Note 3. Accounts Receivable. Accounts receivable consist of the following at December 31: 1996 1995 ------- ------- (Amounts in Thousands) Lease payments $ 763 $ 891 Reimbursement for property taxes 122 181 General Partners and Affiliates 7 39 Other 16 40 ------- ------- 908 1,151 Less: allowance for losses on accounts receivable (424) (548) ------- ------- Total $ 484 $ 603 ======= ======= Note 4. Notes Receivable. Notes receivable consist of the following at December 31: 1996 1995 ------- ------- (Amounts in Thousands) Notes receivable from emerging growth companies, with stated interest ranging from 10% to 21% per annum, receivable in installments ranging from 31 to 60 months, collateralized by a security interest in the equipment financed. $ 4,941 $ 4,584 Notes receivable from cable television system operators with stated interest ranging from 11% to 13% per annum, receivable in installments ranging from 78 to 96 months, collateralized by a security interest in the cable system assets These notes have a graduated repayment schedule followed with a balloon payment. 524 1,332 Notes receivable from other businesses with stated interest ranging from 14% to 16% per annum, receivable in installments ranging from 36 to 85 months, collateralized by the equipment financed. 1,413 1,753 ------- ------- 6,878 7,669 Less: allowance for losses on notes receivable (2,224) (2,241) ------- ------- Total $ 4,654 $ 5,428 ======= ======= The Partnership's notes receivable to cable television system operators provide for a monthly payment rate in an amount that is less than the contractual interest rate. The difference between the payment rate and the contractual interest rate is added to the principal and therefore deferred until the maturity date of the note. Upon maturity of the note, the original principal and deferred interest is due and payable in full. Although the contractual Page 19 of 32 interest rates may be higher, the amount of interest being recognized on the Partnership's outstanding notes receivable to cable television system operators is being limited to the amount of the payments received, thereby deferring the recognition of a portion of the deferred interest until the loan is paid off. At December 31, 1996, the recorded investment in notes that are considered to be impaired was $2,060,000. Included in this amount is $1,938,000 of impaired notes for which the related allowance for losses is $1,916,000 and $122,000 of impaired notes for which there is no allowance. The average recorded investment in impaired loans during the year ended December 31, 1996 was approximately $2,479,000. The Partnership recognized $287,000 of interest income on impaired notes receivable during the year ended December 31, 1996. At December 31, 1995, the recorded investment in notes that are considered to be impaired was $2,747,000. Included in this amount is $2,086,000 of impaired notes for which the related allowance for losses was $1,818,000 and $661,000 of impaired notes for which there was no allowance. The average recorded investment in impaired loans during the year ended December 31, 1995 was approximately $3,490,000. The Partnership recognized $107,000 of interest income on impaired notes receivable during the year ended December 31, 1995. On February 14, 1996, the Partnership foreclosed upon a nonperforming outstanding note receivable to a cable television operator to whom the Partnership, along with other affiliated partnerships managed by the General Partner, had extended credit. Upon foreclosure, this note was reclassified to Investment in Joint Ventures on the balance sheet. The Partnership's net carrying value for this outstanding note receivable was $73,000, for which the Partnership had an allowance for losses on notes of $17,000. This allowance of $17,000 was reversed and recognized as income during the year ended December 31, 1996. This joint venture subsequently sold the cable system on August 30, 1996 at a small gain. During the year ended December 31, 1996, the Partnership received a settlement on one of its notes receivable from a cable television system operator which was considered to be impaired. The Partnership received a recovery of $856,000 as a settlement which was applied to the $605,000 outstanding note receivable balance and the difference of $251,000 was recognized as interest income from notes receivable during the year ended December 31, 1996. The Partnership received payoffs during the year ended December 31, 1995 from three of its impaired notes receivable from cable television system operators and foreclosed upon the assets of another note receivable from a cable television operator. The activity in the allowance for losses on notes receivable during the years ended December 31, is as follows: 1996 1995 ------- ------- (Amounts in Thousands) Beginning balance $ 2,241 $ 2,264 Provision for (recovery of) losses (17) 110 Write downs -- (133) ------- ------- Ending balance $ 2,224 $ 2,241 ======= ======= Note 5. Equipment on Operating Leases and Investment in Financing Leases. Equipment on lease consists primarily of computer peripheral, small computers and other capital equipment. The Partnership's operating leases are for initial lease terms of approximately 24 to 48 months. During the remaining terms of existing operating leases, the Partnership will not recover all of the undepreciated cost and related expenses of its rental equipment, and therefore must remarket a portion of its equipment in future years. The Partnership has entered into direct lease arrangements with businesses in different industries located throughout the United States. Generally, it is the responsibility of the lessee to provide maintenance on leased equipment. The General Partner administers the equipment portfolio of leases acquired through the direct leasing program. Administration includes the collection of rents from the lessees and remarketing of the equipment. Page 20 of 32 The net investment in financing leases consists of the following at December 31: 1996 1995 -------- -------- (Amounts in Thousands) Minimum lease payments to be received $ 21,308 $ 30,719 Estimated residual value of leased equipment (ungaranteed) 9 22 Less: unearned income (3,403) (5,301) allowance for early termination (941) (755) -------- -------- Net investment in financing leases $ 16,973 $ 24,685 ======== ======== Minimum rentals to be received on noncancellable operating and financing leases for the years ended December 31 are as follows: Operating Financing --------- --------- (Amounts in Thousands) 1997........................................... $ 1,395 $ 10,280 1998........................................... 844 6,679 1999........................................... 596 3,344 2000........................................... 217 879 2001........................................... 7 126 -------- -------- Total $ 3,059 $ 21,308 ======== ======== The net book value of equipment held for lease at December 31, 1996 and 1995 amounted to $1,015,000 and $997,000, respectively. Note 6. Investment in Joint Ventures. Equipment Joint Venture. On August 1, 1994, the Partnership entered into an agreement along with two other affiliated partnerships to contribute certain leased assets and notes receivable (the "Assets") to Phoenix Acceptance Limited Liability Company, a Delaware limited liability company (the "Joint Venture") in exchange for a 44.97% equity interest in the Joint Venture. The interest received in the Joint Venture was accounted for at the historical cost basis of the Assets transferred. The Partnership has accounted for its net investment in this Joint Venture using the equity method of accounting. The Joint Venture was organized to hold title to the assets and subsequently transfer such assets to a trust for the purpose of the trust issuing two classes of lease backed certificates to third parties in exchange for cash proceeds. The transaction between the Joint Venture and the trust has been accounted for as a financing arrangement. The Joint Venture retains a residual interest in the assets transferred through the ownership of a third class of subordinated trust certificates. The lease backed certificates are recourse only to the assets used to collateralize the obligation. The net carrying value of such assets contributed by the Partnership to the Joint Venture was approximately $11.2 million and the total carrying value of all of the assets contributed by all three partnerships approximated $24.7 million. The net proceeds from the issuance of the lease backed certificates are being distributed back to the partnerships who contributed to the Joint Venture. On August 5, 1994, the Joint Venture received proceeds from the issuance of the 7.10% Class A lease backed certificates in the principal amount of $18.5 million. On August 12, 1994, the Joint Venture received proceeds from the issuance of the 8.25% Class B lease backed certificates in the principal amount of $5.3 million. The lease backed certificates were paid in full in November 1996. The Equipment Joint Venture owned by the Partnership, along with its percentage ownership is as follows: Weighted Joint Venture Percentage Interest ------------- ------------------- Phoenix Acceptance Limited Liability Company 44.97% Page 21 of 32 An analysis of the Partnership's investment in the Equipment Joint Venture is as follows:
Net Investment Net Investment at Beginning Equity in at End Date of Period Contributions Earnings Distributions of Period - ---- -------------- ------------- --------- ------------- -------------- (Amounts in Thousands) Year Ended December 31, 1994 $ - $11,224 $ 408 $ 9,658 $1,974 ====== ======= ===== ======= ====== Year Ended December 31, 1995 $1,974 $ - $ 533 $ 850 $1,657 ====== ======= ===== ======= ====== Year Ended December 31, 1996 $1,657 $ 69 $ 393 $ 483 $1,636 ====== ======= ===== ======= ======
The aggregate financial information of the Equipment Joint Venture as of December 31 and for the years then ended is presented as follows: BALANCE SHEET ASSETS December 31, 1996 1995 ------- ------- (Amounts in Thousands) Cash and cash equivalents $ 490 $ 1,384 Accounts receivable 59 14 Equipment on operating lease 155 347 Net investment in finance leases 2,930 8,816 Other assets 368 1,018 ------- ------- Total Assets $ 4,002 $11,579 ======= ======= LIABILITIES AND PARTNERS' CAPITAL Accounts payable $ 382 $ 761 Lease backed certificates -- 7,150 Partners' capital 3,620 3,668 ------- ------- Total Liabilities and Partners' Capital $ 4,002 $11,579 ======= ======= STATEMENT OF OPERATIONS INCOME For the Years Ended December 31, 1996 1995 1994 ------- ------- ------- (Amounts in Thousands) Earned income, financing leases $ 855 $ 1,924 $ 1,515 Rental income 536 196 -- Gain on sale of equipment 453 465 26 Other income 181 361 239 ------- ------- ------- Total Income 2,025 2,946 1,780 ------- ------- ------- Page 22 of 32 EXPENSES Depreciation 261 104 4 Management fee to the General Partner 284 283 192 Interest expense 221 924 633 Other expenses 383 450 43 ------- ------- ------- Total Expenses 1,149 1,761 872 ------- ------- ------- Net Income $ 876 $ 1,185 $ 908 ======= ======= ======= As of December 31, 1996 and 1995 the Partnership's pro rata interest in the Equipment Joint Venture's net book value of off-lease equipment was $2,000 and $11,000, respectively. The General Partner earns a management fee of 3.5% of the Partnership's respective interest in gross revenues of the Equipment Joint Venture. A management fee of $743,000 based on cash distributed to the venturers was paid to the General Partner in 1994. Such fees have been capitalized and fully amortized. Cash proceeds subject to a management fee at the joint venture level are not subject to management fees at the Partnership level. Financing Joint Venture. The Partnership owns an interest in a Financing Joint Venture. This investment is accounted for using the equity method of accounting. The other partners of the venture are entities organized and managed by the General Partner. The following information summarizes the Partnership's respective interest in the Financing Joint Venture. Weighted Joint Venture Percentage Interest ------------- ------------------- Phoenix Joint Venture 1994-2 25.00% An analysis of the Partnership's investment account in the Financing Joint Venture is as follows:
Net Investment Net Investment at Beginning Equity in at End Date of Period Contributions Earnings Distributions of Period - ---- -------------- ------------- --------- ------------- -------------- (Amounts in Thousands) Year Ended December 31, 1994 $ - $290 $ 1 $- $ 291 ===== ==== ==== ==== ===== Year Ended December 31, 1995 $ 291 $- $ 44 $ 64 $ 271 ===== ==== ==== ==== ===== Year Ended December 31, 1996 $ 271 $- $ 39 $ 86 $ 224 ===== ==== ==== ==== =====
The aggregate financial information of the Financing Joint Venture as of December 31 and for the years then ended is presented as follows: Page 23 of 32 BALANCE SHEET ASSETS December 31, 1996 1995 ------- ------- (Amounts in Thousands) Cash and cash equivalents $ 155 $ 271 Notes receivable, net 823 977 Accounts receivable 14 11 Other assets 31 37 ------- ------- Total Assets $ 1,023 $ 1,296 ======= ======= LIABILITIES AND PARTNERS' CAPITAL Accounts payable $ 130 $ 215 Partners' capital 893 1,081 ------- ------- Total Liabilities and Partners' Capital $ 1,023 $ 1,296 ======= ======= STATEMENT OF OPERATIONS INCOME For the Years Ended December 31, 1996 1995 1994 ------- ------- ------- (Amounts in Thousands) Interest Income $ 158 $ 187 $ 2 Other income 4 2 -- ------- ------- ------- Total Income 162 189 $ 2 ------- ------- ------- EXPENSES Management fee to the General Partner 6 7 -- Other expenses -- 6 1 ------- ------- ------- Total Expenses 6 13 1 ------- ------- ------- Net Income $ 156 $ 176 $ 1 ======= ======= ======= The General Partner earns a management fee of 3.5% of the Partnership's respective interest in gross payments received for the Financing Joint Venture. Revenues subject to a management fee at the joint venture level are not subject to management fees at the Partnership level. Foreclosed Cable Systems Joint Ventures. The Partnership owns an interest in foreclosed cable systems joint ventures along with other partnerships managed by the General Partner and its affiliates. The Partnership foreclosed upon nonperforming outstanding notes receivable to cable television operators to whom the Partnership, along with other affiliated partnerships managed by the General Partner, had extended credit. The partnerships' notes receivables were exchanged for interests (their capital contribution), on a pro rata basis, in newly formed joint ventures owned by the partnerships and managed by the General Partner. Title to the cable television systems is held by the joint ventures. These investments are accounted for using the equity method of accounting. Page 24 of 32 Weighted Joint Venture Percentage Interest ------------- ------------------- Phoenix Pacific Northwest Cable J.V. 37.22% Phoenix Country Cable J.V. (1) 46.65 Phoenix Independence Cable, LLC 43.69 Phoenix Grassroots Cable System, LLC (2) .80 (1) Cable system sold in 1995 and joint venture closed in 1996. (2) Cable system sold in 1996.
Net Investment Equity in Net Investment at Beginning Earnings at End Date of Period Contributions (Losses) Distributions of Period - ---- -------------- ------------- --------- ------------- -------------- (Amounts in Thousands) Year Ended December 31, 1994 $ 591 $ - $ 20 $ 55 $ 556 ===== ===== ===== ===== ====== Year Ended December 31, 1995 $ 556 $ 229 $ 19 $ 281 $ 523 ===== ===== ===== ===== ====== Year Ended December 31, 1996 $ 523 $ 73 $ (20) $ 158 $ 418 ===== ===== ====== ===== ======
The aggregate combined financial information of the foreclosed cable systems joint ventures as of December 31 and for the years then ended is presented as follows: COMBINED BALANCE SHEETS ASSETS December 31, 1996 1995 ------- ------- (Amounts in Thousands) Cash and cash equivalents $ 166 $ 181 Accounts receivable 32 29 Property, plant and equipment 1,128 1,178 Other 4 3 ------- ------- Total Assets $ 1,330 $ 1,391 ======= ======= LIABILITIES AND PARTNERS' CAPITAL Accounts payable $ 197 $ 98 Partners' capital 1,133 1,293 ------- ------- Total Liabilities and Partners' Capital $ 1,330 $ 1,391 ======= ======= Page 25 of 32 COMBINED STATEMENTS OF OPERATIONS INCOME For the Years Ended December 31, 1996 1995 1994 ------- ------- ------- (Amounts in Thousands) Subscriber revenue $ 1,961 $ 479 $ 433 Gain on sale of cable systems 173 25 -- Other income 34 6 2 ------- ------- ------- Total Income 2,168 510 435 ------- ------- ------- EXPENSES Depreciation and amortization 608 120 110 Program services 635 148 120 Management fee to an affiliate of the General Partner 409 22 19 General and administrative expenses 541 175 128 Provision for losses on accounts receivable 20 5 8 ------- ------- ------- Total Expenses 2,213 470 385 ------- ------- ------- Net Income (Loss) $ (45) $ 40 $ 50 ======= ======= ======= Phoenix Cable Management Inc. (PCMI), an affiliate of the General Partner, provides day to day management services in connection with the operation of the foreclosed cable systems joint ventures. The foreclosed cable systems joint ventures will pay a management fee equal to four and one-half percent of the System's monthly gross revenue for these services. Revenues subject to a management fee at the joint venture level will not be subject to management fees at the Partnership level. Note 7. Accounts Payable and Accrued Expenses. Accounts payable and accrued expenses consist of the following at December 31: 1996 1995 ------- ------- (Amounts in Thousands) Equipment lease operations $ 753 $ 854 General Partner and affiliates 115 385 Security deposits 362 342 Other 281 236 ------- ------- Total $ 1,511 $ 1,817 ======= ======= Note 8. Income Taxes. Federal and state income tax regulations provide that taxes on the income or loss of the Partnership are reportable by the partners in their individual income tax returns. Accordingly, no provision for such taxes has been made in the accompanying financial statements. The net differences between the tax basis and the reported amounts of the Partnership's assets and liabilities is as follows at December 31: Page 26 of 32 Reported Amounts Tax Basis Net Difference ---------------- --------- -------------- (Amounts in Thousands) 1996 - ---- Assets $ 39,564 $ 45,096 $ (5,532) Liabilities 1,500 891 609 1995 - ---- Assets $ 50,182 $ 55,687 $ (5,505) Liabilities 1,736 1,112 624 The Subsidiary is a corporation subject to state and federal tax regulations. The Subsidiary reports to the taxing authority on the accrual basis. When income and expenses are recognized in different periods for financial reporting purposes than for income tax purposes, deferred taxes are provided for such differences using the liability method. The Subsidiary's income tax benefit (provision) includes the following components for the years ended December 31: 1996 1995 ------- ------- (Amounts in Thousands) Current tax benefit $ -- $ 58 Deferred tax expense related to future taxable income, net -- (17) Provision for valuation allowance on net deferred tax asset (40) -- ------- ------- Income tax benefit (provision), net $ (40) $ 41 ======= ======= Note 9. Related Entities. The General Partner and affiliates serve in the capacity of general partner in other partnerships, all of which are engaged in the equipment leasing and financing business. Note 10. Reimbursed Costs to the General Partner. The General Partner incurs certain administrative costs, such as data processing, investor and lessee communications, lease administration, accounting, equipment storage and equipment remarketing, for which it is reimbursed by the Partnership. These expenses incurred by the General Partner are to be reimbursed at the lower of the actual costs or an amount equal to 90% of the fair market value for such services. The reimbursed administrative costs to the General Partner were $734,000, $914,000 and $858,000 for the years ended December 31 1996, 1995 and 1994, respectively. The equipment storage, remarketing and data processing costs reimbursed to the General Partner during the years ended December 31, 1996, 1995 and 1994 were $237,000, $401,000, and $665,000, respectively. Note 11. Net Income (Loss) and Distributions per Limited Partnership Unit. Net income (loss) and distributions per limited partnership unit were based on the limited partner's share of consolidated net income (loss) and distributions, and the weighted average number of units outstanding of 6,273,582, 6,346,597 and 6,392,111 for the years ended December 31, 1996, 1995 and 1994, respectively. For the purposes of allocating consolidated income (loss) and distributions to each individual limited partner, the Partnership allocates consolidated net income (loss) and distributions based upon each respective limited partner's net capital contributions. Note 12. Subsequent Events. In January 1997, cash distributions of $197,000 and $2,410,000 were made to the General and Limited Partners, respectively. Page 27 of 32 Note 13. Fair Value of Financial Instruments. The following methods and assumptions were used to estimate the fair value of each class of financial instrument which it is practicable to estimate that value. Cash and Cash Equivalents The carrying amount of cash and cash equivalents approximates fair value because of the short maturity of these instruments. Notes Receivable The fair value of notes receivable is estimated based on the lesser of the discounted expected future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings, or the estimated fair value of the underlying collateral. Securities, Available-for-Sale The fair values of investments in available for sale securities are estimated based on quoted market prices. The estimated fair values of the Partnership's financial instruments are as follows at December 31: Carrying Amount Fair Value -------- ---------- 1996 (Amounts in Thousands) - ---- Assets Cash and cash equivalents $12,134 $12,134 Securities, available-for-sale 525 525 Notes receivable 4,654 5,114 1995 - ---- Assets Cash and cash equivalents $11,571 $11,571 Securities, available-for-sale 377 377 Notes receivable 5,428 6,769 Page 28 of 32 Item 9. Disagreements on Accounting and Financial Disclosure Matters. None. PART III Item 10. Directors and Executive Officers of the Registrant. The registrant is a limited partnership and, therefore, has no executive officers or directors. The general partner of the registrant is Phoenix Leasing Incorporated, a California corporation. The directors and executive officers of Phoenix Leasing Incorporated (PLI) are as follows: GUS CONSTANTIN, age 59, is President, Chief Executive Officer and a Director of PLI. Mr. Constantin received a B.S. degree in Engineering from the University of Michigan and a Master's Degree in Management Science from Columbia University. From 1969 to 1972, he served as Director, Computer and Technical Equipment of DCL Incorporated (formerly Diebold Computer Leasing Incorporated), a corporation formerly listed on the American Stock Exchange, and as Vice President and General Manager of DCL Capital Corporation, a wholly-owned subsidiary of DCL Incorporated. Mr. Constantin was actively engaged in marketing manufacturer leasing programs to computer and medical equipment manufacturers and in directing DCL Incorporated's IBM System/370 marketing activities. Prior to 1969, Mr. Constantin was employed by IBM as a data processing systems engineer for four years. Mr. Constantin is an individual general partner in four active partnerships and is an NASD registered principal. Mr. Constantin is the founder of PLI and the beneficial owner of all of the common stock of Phoenix American Incorporated. PARITOSH K. CHOKSI, age 43, is Senior Vice President, Chief Financial Officer, Treasurer and a Director of PLI. He has been associated with PLI since 1977. Mr. Choksi oversees the finance, accounting, information services and systems development departments of the General Partner and its Affiliates and oversees the structuring, planning and monitoring of the partnerships sponsored by the General Partner and its Affiliates. Mr. Choksi graduated from the Indian Institute of Technology, Bombay, India with a degree in Engineering. He holds an M.B.A. degree from the University of California, Berkeley. GARY W. MARTINEZ, age 46, is Senior Vice President and a Director of PLI. He has been associated with PLI since 1976. He manages the Asset Management Department, which is responsible for lease and loan portfolio management. This includes credit analysis, contract terms, documentation and funding; remittance application, change processing and maintenance of customer accounts; customer service, invoicing, collection, settlements and litigation; negotiating lease renewals, extensions, sales and buyouts; and management information reporting. From 1973 to 1976, Mr. Martinez was a Loan Officer with Crocker National Bank, San Francisco. Prior to 1973, he was an Area Manager with Pennsylvania Life Insurance Company. Mr. Martinez is a graduate of California State University, Chico. BRYANT J. TONG, age 42, is Senior Vice President, Financial Operations of PLI. He has been with PLI since 1982. Mr. Tong is responsible for investor services and overall company financial operations. He is also responsible for the technical and administrative operations of the cash management, corporate accounting, partnership accounting, accounting systems, internal controls and tax departments, in addition to Securities and Exchange Commission and other regulatory agency reporting. Prior to his association with PLI, Mr. Tong was Controller-Partnership Accounting with the Robert A. McNeil Corporation for two years and was an auditor with Ernst & Whinney (succeeded by Ernst & Young) from 1977 through 1980. Mr. Tong holds a B.S. in Accounting from the University of California, Berkeley, and is a Certified Public Accountant. CYNTHIA E. PARKS, age 41, is Vice President, General Counsel and Assistant Secretary of PLI. Prior to joining PLI in 1984, she was with GATX Leasing Corporation, and had previously been Corporate Counsel for Stone Financial Companies, and an Assistant Vice President of the Bank of America, Bank Amerilease Group. She has a bachelor's degree from Santa Clara University, and earned her J.D. from the University of San Francisco School of Law. Neither the General Partner nor any Executive Officer of the General Partner has any family relationship with the others. Phoenix Leasing Incorporated or its affiliates and the executive officers of the General Partner serve in a similar capacity to the following affiliated limited partnerships: Phoenix Leasing American Business Fund, L.P. Phoenix Leasing Cash Distribution Fund V, L.P. Phoenix Income Fund, L.P. Phoenix High Tech/High Yield Fund Phoenix Leasing Cash Distribution Fund III Phoenix Leasing Cash Distribution Fund II Page 29 of 32 Phoenix Leasing Income Fund VII Phoenix Leasing Income Fund VI Phoenix Leasing Growth Fund 1982 and Phoenix Leasing Income Fund 1977 Item 11. Executive Compensation. Set forth is the information relating to all direct remuneration paid or accrued by the Registrant during the last year to the General Partner and its affiliate. (A) (B) (C) (D)
Cash and cash- Aggregate of Name of Individual Capacities in equivalent forms contingent forms or persons in group which served of remuneration of remuneration - ------------------- ------------- ---------------------------------------------- ---------------- (C1) (C2) Securities or property Salaries, fees, directors' insurance benefits or fees, commissions, and reimbursement, personal bonuses benefits -------------------------- ----------------------- (Amounts in Thousands) Phoenix Leasing Incorporated General Partner $ 1,291(1) $ 0 $ 0 Phoenix Cable Manager 35(2) 0 0 Management, Inc. -------- --- ---- $ 1,326 $ 0 $ 0 ======== === ====
(1) consists of management and acquisition fees. (2) consists of management fees. Item 12. Security Ownership of Certain Beneficial Owners and Management. (a)No person owns of record, or is known by the Registrant to own beneficially, more than five percent of any class of voting securities of the Registrant. (b)The General Partner of the Registrant owns the equity securities of the Registrant set forth in the following table: (1) (2) (3) Title of Class Amount Beneficially Owned Percent of Class -------------- ------------------------- ---------------- General Partner Interest Represents a 5% interest in 100% the Registrant's profits and distributions, until the Limited Partners have recovered their capital contributions plus a cumulative return of 12% per annum, compounded quarterly, on the unrecovered portion thereof. Thereafter, the General Partner will receive 15% interest in the Registrant's profits and distributions. Limited Partner Interest 1,100 units .02 Item 13. Certain Relationships and Related Transactions. None. Page 30 of 32 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. Page No. -------- (a) 1. Financial Statements: Consolidated Balance Sheets as of December 31, 1996 and 1995 11 Consolidated Statements of Operations for the Years Ended December 31, 1996, 1995 and 1994 12 Consolidated Statements of Partners' Capital for the Years Ended December 31, 1996, 1995 and 1994 13 Consolidated Statements of Cash Flows for the Years Ended December 31, 1996, 1995 and 1994 14 Notes to Consolidated Financial Statements 15-27 2. Financial Statement Schedule: Schedule II - Valuation and Qualifying Accounts and Reserves 32 All other schedules are omitted because they are not applicable, or not required, or because the required information is included in the financial statements or notes thereto. (b) Reports on Form 8-K: No reports on Form 8-K were filed for the quarter ended December 31, 1996. (c) 21.Additional Exhibits. a) Listing of all subsidiaries of the Registrant: Phoenix Westcom Cablevision, Inc., a Nevada corporation and wholly owned subsidiary. Page 31 of 32 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PHOENIX LEASING CASH DISTRIBUTION FUND IV, A CALIFORNIA LIMITED PARTNERSHIP (Registrant) BY: PHOENIX LEASING INCORPORATED, A CALIFORNIA CORPORATION GENERAL PARTNER Date: March 25, 1997 By: /S/ GUS CONSTANTIN -------------- ------------------------ Gus Constantin, President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date --------- ----- ---- /S/ GUS CONSTANTIN President, Chief Executive Officer and a March 25, 1997 - ---------------------- Director of Phoenix Leasing Incorporated, -------------- (Gus Constantin) General Partner /S/ PARITOSH K. CHOKSI Chief Financial Officer, March 25, 1997 - ---------------------- Senior Vice President, -------------- (Paritosh K. Choksi) Treasurer and a Director of Phoenix Leasing Incorporated General Partner /S/ BRYANT J. TONG Senior Vice President, March 25, 1997 - ---------------------- Financial Operations of -------------- (Bryant J. Tong) (Principal Accounting Officer) Phoenix Leasing Incorporated General Partner /S/ GARY W. MARTINEZ Senior Vice President and a Director March 25, 1997 - ---------------------- of Phoenix Leasing Incorporated -------------- (Gary W. Martinez) General Partner /S/ MICHAEL K. ULYATT Partnership Controller March 25, 1997 - ---------------------- of Phoenix Leasing Incorporated -------------- (Michael K. Ulyatt) General Partner Page 32 of 32 PHOENIX LEASING CASH DISTRIBUTION FUND IV, A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY SCHEDULE II (Amounts in Thousands) SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F Classification Balance at Charged to Charged to Deductions Balance at Beginning of Expense Revenue End of Period Period - --------------------------- --------------------- ------------------- --------------- -------------- ------------- Year ended December 31, 1994 Allowance for losses on accounts receivable $ 296 $ 263 $ 0 $ 72 $ 487 Allowance for early termination of financing leases 1,509 718 0 408 1,819 Allowance for losses on notes receivable 1,551 908 0 195 2,264 --------- -------- ------ ------ ------- Totals $ 3,356 $ 1,889 $ 0 $ 675 $ 4,570 ========= ======== ====== ====== ======= Year ended December 31, 1995 Allowance for losses on accounts receivable $ 487 $ 386 $ 0 $ 325 $ 548 Allowance for early termination of financing leases 1,819 408 0 1,472 755 Allowance for losses on notes receivable 2,264 110 0 133 2,241 --------- -------- ------ ------ ------- Totals $ 4,570 $ 904 $ 0 $1,930 $ 3,544 ========= ======== ====== ====== ======= Year ended December 31, 1996 Allowance for losses on accounts receivable $ 548 $ 0 $ 3 $ 121 $ 424 Allowance for early termination of financing leases 755 352 0 166 941 Allowance for losses on notes receivable 2,241 0 17 0 2,224 --------- -------- ------ ------ ------- Totals $ 3,544 $ 352 $ 20 $ 287 $ 3,589 ========= ======== ====== ====== =======
EX-27 2
5 1,000 YEAR DEC-31-1996 DEC-31-1996 12,134 0 7,786 2,648 0 0 27,555 26,179 39,575 0 0 0 0 0 38,064 39,575 0 12,926 0 7,030 0 338 0 5,896 40 5,856 0 0 0 5,856 .81 0
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